Tax season nightmare ahead for understaffed IRS

1/20/2022 2:59:00 PM

We’re running out of steam,” one official said.

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The IRS will start accepting 2021 tax returns in less than a week, and the filing delays and administrative headaches to come might eclipse last year's nightmare, according to an independent advocacy agency within the IRS.

We’re running out of steam,” one official said.

The IRS budget declined by 20% since 2010, even as the number of taxpayers increased by 19%.What happened:The pressures of COVID-19 pushed the already-underfunded agency over the edge. “We’re running out of steam,” the revenue agent said.The IRS, which relies on some software built in the 1960s, is facing a big backlog of paper filings from last year, including 6.2 million unprocessed 1040 forms.

The IRS doesn’thave scanning technology, relying instead on humans to open the mail and manually enter information into its system.Last year, the agency received 282 million phone calls and answered just 29 million of them.Worth noting:Despite its limitations, during the pandemic the agency succeeded in getting multiple rounds of stimulus checks out, as well as monthly childcare tax credit payments to parents.

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The IRS is “in crisis,” the group said. The IRS budget declined by 20% since 2010, even as the number of taxpayers increased by 19%. "They dropped the ball on me," said Melody Reeder of Mt. What happened: The pressures of COVID-19 pushed the already-underfunded agency over the edge.O) over potential tax benefits are deadlocked as the government is not keen to give the company any breaks without a commitment to manufacture locally, people familiar with the discussions told Reuters. “We’re running out of steam,” the revenue agent said. She's been impatiently waiting for her $2,500 IRS refund for 10 months. The IRS, which relies on some software built in the 1960s, is facing a big backlog of paper filings from last year, including 6.

2 million unprocessed 1040 forms." Reeder is far from alone. Register now for FREE unlimited access to Reuters. The IRS doesn’t have scanning technology, relying instead on humans to open the mail and manually enter information into its system. Last year, the agency received 282 million phone calls and answered just 29 million of them. The IRS and Treasury Department issued a warning of more delays this year due to staffing shortages. Worth noting: Despite its limitations, during the pandemic the agency succeeded in getting multiple rounds of stimulus checks out, as well as monthly childcare tax credit payments to parents. The sources declined to be identified as the discussions are private. The vast majority of taxpayers got their refunds promptly. Washington is now a tax expert at Forbes Advisor.

What’s next: Treasury is hoping for new funding to come through, already making staffing moves in anticipation of getting as much as $80 billion from the Biden administration’s Build Back Better legislation, the Treasury official said. Yes, but: BBB's chances are fading. They can also use a tool what's called Where's My Refund, they can put in information and just determine where their tax refund is in process at this time," she said. This would make India the most expensive market for Tesla cars in the world, putting them well out of reach for most Indian consumers. The bottom line: The bulk of the issues with tax filing season involve paper filings. If you can file electronically using direct deposit, do that. "It says 'We'll notify you if there has been any changes', that has been on my site since after 21 days," she said. Oh, and be careful: Mistakes jam up the process. Tesla did not respond to a request for comment.

Go deeper . "That's something that you do not want to do.